Navigators' NIIC outlook negative due to uncertain business plans

Ratings agency AM Best has revised the outlook of Navigators International Insurance Company (NIIC) to negative from stable, citing "uncertainty" and "lack of scale".

The negative outlook reflects uncertainty regarding the future business plans of NIIC, and the impact that this has on its business profile and its strategic importance to its ultimate parent The Hartford Financial Services Group, which includes a capital maintenance agreement from NIIC’s intermediate parent, The Navigators Group.

The company’s strategy has been under review following the UK’s vote to withdraw from the EU and the subsequent transfer of its EU-related business to The Hartford’s Belgium-based operating entity. The volume of business written by NIIC decreased to £GBP 7 million in 2019 from £37 million in 2018.

AM Best noted that NIIC’s operating performance has been marginal since inception due to unexpectedly large claims and high start-up expenses relative to premium underwritten. NIIC commenced writing marine, casualty and professional liability business in the European Union (EU) in 2016.

The agency expects prospective underwriting results to continue to be affected by the company’s "lack of scale".

NIIC’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), improved to the strongest level at year-end 2019, as a result of the decrease in underwriting risk following the reorganisation of The Hartford group’s operations in Europe. The balance sheet strength assessment also factors in NIIC’s high quality investment portfolio and its comprehensive reinsurance protection.